The new owners of an Ottawa tech company that was recently acquired by a Swedish software enterprise say they plan to make major investments in the local firm’s operations as they push to become a world leader in the growing cloud management space.
Snow Software, an IT infrastructure management firm headquartered in Stockholm, said Tuesday it has purchased Kanata-based Embotics in an all-cash transaction. Financial terms of the deal were not disclosed.
Founded in 2006, Embotics helps customers keep track of their cloud-based tech infrastructure, including software applications and computing platforms such as Amazon Web Services. Snow, which started 22 years ago and now counts automakers Jaguar and Saab among its more than 4,000 global customers, provides similar services for clients to monitor the IT software and hardware they use at their physical office spaces.
Embotics founder Jay Litkey says the newly combined company will offer a complete picture of all the technology its customers are using on a daily basis – including how many copies of a particular product they own, how often each bit of hardware and software is being used and whether clients are complying with all the licensing requirements.
The goal, he says, is to ensure customers are getting the most bang for their IT buck.
“Before we got together, we each could only give a partial story about what you have and what that spend is,” he says. “Together, we can now give full visibility, and that’s very powerful. The savings goes up, the confidence goes up and you now have that 100 per cent visibility and certainty.”
Litkey, whose company now employs about 60 people, says that as companies scale up, they often end up buying far more cloud-based applications than they actually need to effectively run their operations.
“And they do that because they lose track of what they have and how they’re using the cloud, because it’s no longer in their data centre,” he explains. “That massive overspending problem ends up biting almost everybody.”
Litkey says Embotics now has “north of 100” customers, among them high-profile companies such as HBO, NASA and clothing retailer Nordstrom. The serial entrepreneur says the firm has demonstrated it can save clients “many millions of dollars” a year by helping them streamline their cloud-based IT spending.
Snow Software CEO Vishal Rao says the Swedish company began looking at how best to branch out into cloud-based services about 18 months ago and decided the M&A route was the way to go. Management considered a number of acquisition targets before zeroing in on Embotics.
“It’s very rare that you get an opportunity to bring together two market leaders,” says Rao, whose 700-person company surpassed the $100-million mark in revenues for the first time in 2019.
“We have done just that. From a technology perspective, from a cultural fit perspective and then purely from an alignment on long-term strategy perspective, we felt Embotics was the best fit.”
Embotics headquarters on Leggett Drive will now become a “key hub” of research and development for Snow, according to Rao. He says Snow intends to “double down on the investment that Embotics has made” in its operations, suggesting the company’s footprint in Kanata will continue to grow.
“We plan on being in Ottawa for a long time to come,” Rao says.
The local leadership team will remain largely intact. Litkey is moving into the role of executive vice-president of cloud management and will remain based in Ottawa, while other key Embotics executives – including VP of engineering Brian Clow, chief technology officer Jesse Stockall and executive vice-president of products Mark Jamensky – will also move into senior roles with the Swedish firm and continue to work out of the Kanata office.
CEO Michael Torto will stay on with the company for a “transition period” before shifting to an advisory role.
The cloud computing space presents a “multibillion-dollar” opportunity, Litkey says, but building out a global sales team from scratch is “very expensive and time-consuming and risky.” Joining forces with Snow gives Embotics instant access to its larger partner’s extensive international sales and marketing team, he says, opening the door to huge growth potential.
“One of our challenges that most Ottawa companies have, is how do we compete on a global scale,” he explains. “Because it’s one thing to build the world’s best technology – something that Ottawa companies are very good at doing – it’s a whole other ballgame to get that out into the global market. Snow … allows us to compete on the global scale because they have really good, deep, solid talent in all of the major markets of the world geographies.”
Litkey says the capital’s deep pool of skilled software engineers is a major drawing card for foreign enterprises such as Snow, adding he believes the Swedish company when it says it’s committed to the city for the long haul.
“This is not a, ‘Let’s take this IP and run with it,’” he says.
“As a longtime Ottawa resident, I have seen too many stories of great technologies or great ideas departing and nothing being left. Ottawa will remain a major hub for Snow pursuing this billion-dollar opportunity.”